Login failed for user DOMAIN\SERVER$, Active Directory Auhtentication

I added security in the form of Roles and Users Groups in SQL 2005. Using Active Directory I would like to connect to my application using the Roles which I have set-up in my web.config file.
Aportion of my web.config file that pertains to connecting to the database and code snippet from one of the ASPX.VB files is included.

I am on week two of trying to resolve this error, your help is greatly appreciated.

More confusion has resulted by reading your suggested solution, not to say that contained within it is a solution, just I don't understand fully, where I need to begin.
Question:
Am I to modifiy the Machine.config file contents to resemble that listed on the solution site?
Where might I find the Machine.config file (do note that my level is beginner)?
My application has three level of users with a three passwords, how to I incorporate the specifics into the Machine.config file?
What is the Application Pool and where might I find it?
How to I ensure that the Application Pool is a member of IIS_WPG Group in order to give it rights to Microsoft.Net\version no...., and the temp directory.
How do I restart the App Pool?

in IIS you can see what account is used for your Application Pool (see tab identity) ->it is probably network system account;

in local user groups on the server check if it is member of IIS_WPG
then:
--
for this account -give NTFS (Full) permisssions on the folder C:\windows\Microsoft.NET
--
<restart the App Pool?
in IIS right click App Pool- stop - start or restart IIS..

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